The St. Anthony Hospital Foundation, Inc. (A Member of SSM Health Care of Oklahoma, Inc.)

Transcription

1 The St. Anthony Hospital Foundation, Inc. (A Member of SSM Health Care of Oklahoma, Inc.) Financial Statements as of and for the Years Ended December 31, 2010 and 2009, and Independent Auditors Report

2 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT 1 FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 and 2009: Statements of Financial Position 2 Statements of Activities 3 4 Statements of Cash Flows 5 Page Notes to Financial Statements 6 14

3 Deloitte & Touche LLP Suite South 4th Street St. Louis, MO USA Tel: Fax: INDEPENDENT AUDITORS REPORT To the Board of Directors The St. Anthony Hospital Foundation, Inc. Oklahoma City, Oklahoma: We have audited the accompanying statements of financial position of The St. Anthony Hospital Foundation, Inc. (the Foundation ) as of December 31, 2010 and 2009, and the related statements of activities and changes in net assets, and cash flows for the years then ended. These financial statements are the responsibility of the Foundation s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Foundation as of December 31, 2010 and 2009, and changes in its net assets, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. June 6, 2011

4 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2010 AND 2009 ASSETS Cash $ 122,616 $ 248,603 Pledges receivable - net 607, ,048 Investments 24,302,421 21,834,138 Property and equipment - net 130, ,201 Other assets 340, ,552 TOTAL $ 25,502,192 $ 23,214,542 LIABILITIES AND NET ASSETS LIABILITIES: Accounts payable and accrued expenses $ 980,164 $ 358,730 Gift annuity liability 419, ,297 Total liabilities 1,399, ,027 NET ASSETS: Unrestricted 12,395,609 11,102,338 Temporarily restricted 11,631,692 11,132,604 Permanently restricted 75,573 75,573 Total net assets 24,102,874 22,310,515 TOTAL $ 25,502,192 $ 23,214,542 See notes to financial statements

5 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 Temporarily Permanently 2010 Unrestricted Restricted Restricted Total REVENUES, GAINS, AND OTHER SUPPORT: Contributions $ 171,802 $ 876,747 $ - $ 1,048,549 Special fundraising events net of direct donor benefits of $119, , ,784 Change in unrealized gains on investment net 1,016, ,217-1,432,284 Investment income net 876, ,433-1,381,241 Total investment income 1,892, ,650-2,813,525 Net assets released from restriction: Operating purposes 642,983 (642,983) - - Capital purposes 655,326 (655,326) - - Total revenues, gains, and other support 3,591, ,088-4,090,858 EXPENSES: Contributions to the hospital: Donor restricted for operations 642, ,983 Donor restricted for capital 655, ,326 Board designated for operations 325, ,843 Actuarial gain on gift annuity liability (47,802) - - (47,802) Management and general 221, ,902 Fundraising 500, ,247 Total expenses 2,298, ,298,499 CHANGE IN NET ASSETS 1,293, ,088 1,792,359 NET ASSETS Beginning of year 11,102,338 11,132,604 75,573 22,310,515 NET ASSETS End of year $ 12,395,609 $ 11,631,692 $ 75,573 $ 24,102,874 See notes to financial statements. (Continued) - 3 -

6 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 Temporarily Permanently 2009 Unrestricted Restricted Restricted Total REVENUES, GAINS, AND OTHER SUPPORT: Contributions $ 312,932 $ 482,249 $ - $ 795,181 Special fundraising events net of direct donor benefits of $150, , ,827 Change in unrealized gains on investment net 2,907,276 1,350,616-4,257,892 Investment income (loss) net (240,890) (153,641) (394,531) Total investment income 2,666,386 1,196,975-3,863,361 Net assets released from restriction: Operating purposes 848,031 (848,031) - - Capital purposes 131,375 (131,375) - - Total revenues, gains, and other support 4,111, ,818-4,811,369 EXPENSES: Contributions to the hospital: Donor restricted for operations 848, ,031 Donor restricted for capital 131, ,375 Board designated for operations 356, ,653 Management and general 157, ,947 Fundraising 486, ,607 Total expenses 1,980, ,980,613 CHANGE IN NET ASSETS 2,130, ,818-2,830,756 NET ASSETS Beginning of year 8,971,400 10,432,786 75,573 19,479,759 NET ASSETS End of year $ 11,102,338 $ 11,132,604 $ 75,573 $ 22,310,515 See notes to financial statements. (Concluded) - 4 -

7 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 AND CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 1,792,359 $ 2,830,756 Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation expense 3,070 2,703 Provision for uncollectible pledges 38,524 18,603 Contributions restricted for long-term investment (547,846) (35,198) Gains and losses on investments net (2,069,491) (4,257,892) Actuarial loss on gift annuity liability (47,802) 57,965 Changes in assets and liabilities: Pledges receivable 128, ,550 Other assets (115,463) (12,683) Accounts payable and accrued expenses 621,434 (215,921) Net cash used in operating activities (196,700) (1,311,117) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment - (4,715) Purchases of investments (27,049,382) (56,034,430) Proceeds from sales of investments 26,650,590 57,427,049 Net cash (used in) provided by investing activities (398,792) 1,387,904 CASH FLOWS FROM FINANCING ACTIVITIES: Payments to gift annuitants (78,341) (78,341) Contributions restricted for long-term investment 547,846 35,198 Net cash provided by (used in) financing activities 469,505 (43,143) NET CHANGE IN CASH AND CASH EQUIVALENTS (125,987) 33,644 CASH Beginning of year 248, ,959 CASH End of year $ 122,616 $ 248,603 See notes to financial statements

8 THE ST. ANTHONY HOSPITAL FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND ORGANIZATION AND PURPOSE The St. Anthony Hospital Foundation, Inc. (the Foundation ) was founded in 1963 to benefit St. Anthony Hospital (the Hospital ). The Foundation also provides support for other SSM Health Care of Oklahoma, Inc. (SSMOK) hospitals and for charitable purposes conducted primarily within the metropolitan Oklahoma City, Oklahoma area. The sole member of the Foundation is SSMOK. The Hospital is an operating division of SSMOK. SSM Health Care Corporation (SSMHC), as corporate member of SSMOK, reserves certain powers over SSMOK and the Foundation. The Foundation is exempt from income taxes under Section 501(a) of the Internal Revenue Code (the Code ) as an organization described in Section 501(c)(3) of the Code. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Foundation s significant accounting policies is as follows: Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value. Investments in mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the Foundation. Due to the volatility of the U.S. economy and the financial markets, there is uncertainty regarding the long-term impact market conditions will have on the Foundation s investment portfolio. The Foundation holds its investments in a pooled investment program managed by SSMHC. The earnings are allocated proportionately according to ownership percentages as defined in the pooled investment agreements. The Foundation s investments account for less than 1% of the pooled investments. The Foundation has elected the fair value option for financial investments in limited partnerships and limited liability corporations made through the pooled investment program that would otherwise be recorded using either the cost or equity methods. The Foundation made this election in order to ensure that the accounting treatment of these investments was comparable between categories, regardless of the current organizational structure of the various investments. Pledges Receivable Unconditional promises to give which are expected to be collected within one year are recorded at estimated net realizable value. Unconditional promises to give which are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The Foundation considers past collection experience and creditworthiness of the donor in estimating the future cash flows of promises to give. The discounts on those amounts are computed using risk-free interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Property and Equipment Property and equipment are recorded at cost, or if donated, at fair value at the date of receipt. Depreciation expense is determined by the straight-line method over the estimated useful life of the asset: 3 to 20 years. Property includes land of $124,100 that is held for investment purposes

9 Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are those whose use has been limited by donors to a specific time period or purpose. These assets are restricted for the purpose of acquiring long-lived assets and for specific program purposes. Permanently restricted net assets have been restricted by donors to be maintained by the Foundation in perpetuity. Income earned on permanently restricted net assets is classified as temporarily restricted. Contributions Contributions, including unconditional promises to give, are recognized at their fair value at the time of receipt. For financial reporting purposes, the Foundation distinguishes between contributions that are unrestricted, temporarily restricted, or permanently restricted based on the restrictions placed on their use by the donors. Contributions restricted for additions to property and equipment are recorded as temporarily restricted assets. When their restrictions have been met by the Foundation, these temporarily restricted contributions are recorded as net assets released from restrictions for capital purposes. Contributions temporarily restricted for other purposes are reported as temporarily restricted contributions. When such donor-imposed restrictions are met by the Foundation, they are reported as net assets released from restrictions and are added to unrestricted net assets. Contributions of assets that donors have stipulated must be maintained permanently, with only the income earned thereon available for current use, are classified as permanently restricted assets. Contributions for which donors have not stipulated restrictions are reported as total revenues, gains, and other support. Investment Income Investment income from unrestricted funds is reported as investment income (loss) net. The cost of investments sold is based on the specific-identification method. Investment income on investments of donor-restricted funds, other than endowments, is included in total investment income unless the income or loss is restricted by donors. Investment income that is restricted by the donor is recorded directly to temporarily or permanently restricted net assets, in accordance with the donor-imposed restrictions. Income Taxes The Foundation evaluates its uncertain tax positions on an annual basis. There have been no uncertain tax positions recorded in 2010 or Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include allowance for uncollectible pledge receivables, gift annuity liability and investment valuation. Endowment The Foundation preserves the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and, if applicable, (c) accumulations to the permanent endowment made in accordance with specific donor instructions. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation. The Foundation considers the following factors in making determinations to appropriate or accumulate donor-restricted endowment funds. (1) State Law (2) The duration and preservation of the fund - 7 -

10 (3) The purposes of the donor-restricted endowment funds and how they relate to the Foundation s priorities for carrying out its mission within the communities it serves (4) General economic conditions (5) The possible effects of inflation and deflation (6) The expected total return from income and the appreciation of investments (7) Other resources available to the entity and its beneficiary, if applicable (8) The investment policies of the entity Change in Presentation The 2009 statement of financial position presentation has been changed to conform to the current year presentation. Subsequent Events For the year ended December 31, 2010, the Foundation has evaluated subsequent events for potential recognition and disclosure through June 6, 2011, the date the financial statements were available for issuance. New Accounting Pronouncements In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update No , Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements ( ASU ), which requires new disclosures related to transfers in and out of Level 1 and Level 2 fair value measurements, including reasons for the transfers, and to require new disclosures related to activity in Level 3 fair value measurements. In addition, ASU clarifies existing disclosure requirements related to the level of disaggregation of classes of assets and liabilities and provides further detail about inputs and valuation techniques used for fair value measurements. The Foundation adopted ASU effective December 31, The adoption of ASU did not have an impact on the Foundation s financial statements. 3. INVESTMENTS Investments reported at fair value are comprised of the following investment classifications at December 31, 2010: Cash and cash equivalents $ 603,060 Corporate obligations 1,603,684 Government securities 1,814,817 Mutual funds: Domestic 7,592,653 International 1,125,747 Equities: Small cap 803,661 Mid cap 1,816,401 Large cap 6,558,783 Real estate 243,729 Real estate investments 2,139,886 Total $ 24,302,

11 Investments reported at fair value are comprised of the following investment classifications at December 31, 2009: Cash and cash equivalents $ 742,540 Equity securities 8,483,309 Government securities 1,224,328 Corporate obligations 1,364,145 Mutual funds 8,068,453 Real estate investments 1,951,363 Total $ 21,834,138 A summary of investment income for the year ended December 31, 2010 and 2009, is as follows: Interest and dividends $ 744,034 $ 792,035 Realized and unrealized gains on investments net 2,069,491 3,071,326 Total $ 2,813,525 $ 3,863, PLEDGES RECEIVABLE The Foundation recognizes pledges receivable for unconditional promises to give from donors. Pledges receivable is comprised of the following unconditional promises to give: Gross unconditional promises $ 655,248 $ 835,008 Less unamortized discount (9,239) (21,960) Less allowance for doubtful pledges (39,000) (39,000) Net unconditional promises $ 607,009 $ 774,048 Gross amounts due in: Less than one year $ 551,468 $ 492,450 One to five years 103, ,558 $ 655,248 $ 835,008 The Foundation wrote off as uncollectible pledges totaling $38,524 and $18,603 for the years ended December 31, 2010 and 2009, respectively. 5. FAIR VALUE MEASUREMENTS The Foundation defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Foundation s own credit risk

12 The fair values of all assets recognized or disclosed at fair value are classified based on the lowest level of significant inputs. The Foundation used the following methods to determine fair value: Level 1 Quoted prices (unadjusted) in active markets for identical assets that the Foundation has the ability to access on the report date. Level 2 Inputs (financial matrices, models, valuation techniques) other than quoted market prices included in Level 1, that are observable for the asset, either directly or indirectly. If the asset has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset. Such observable inputs include benchmarking prices for similar assets in active, liquid markets, quoted prices in markets that are not active and observable yields and spreads in the market. The Foundation s Level 2 assets include investment securities with quoted prices that are traded less frequently than exchange-traded instruments. This category primarily includes corporate obligations and government securities. Level 2 valuations are generally obtained from third party pricing services for identical or comparable assets. Prices from services are validated through analytical reviews and assessment of current market activity. Level 3 Inputs (such as professional appraisals, quoted prices from inactive markets that require adjustment based on significant assumptions or data that is not current data from independent sources) that are unobservable for the asset. The Foundation holds investments in real estate funds and international funds. The real estate funds invest in real estate investment trusts and commercial real estate, diversified by geographical location and use. For the years ended December 31, 2010 and 2009, a majority of the real estate investments and international funds are recorded at the net asset value (NAV), which is the estimated fair value of the investments. The real estate investments and international funds are redeemable at NAV under the original terms of the agreements. However, it is possible that these redemption rights may be restricted or eliminated by the funds in the future in accordance with the underlying fund agreements. Due to the nature of the investments held by the funds, changes in market conditions and the economic environment may significantly impact the NAV of the funds and, consequently, the fair value of the Foundation s interests in the funds. Although a secondary market exists for these investments, it is not active and individual transactions are typically not observable. When transactions do occur in this limited secondary market, they may occur at discounts to the reported NAV. It is therefore reasonably possibly that if the Foundation were to sell these investments in the secondary market a buyer may require a discount to the reported NAV, and the discount could be significant. As such, the Foundation has classified these as Level 3 investments. In addition, the unfunded commitments to these funds are $0 and $214,600 at December 31, 2010 and 2009, respectively

13 Following is a summary of assets measured at fair value on a recurring basis by level of significant input for 2010 and 2009: 2010 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents restricted $ 603,060 $ - $ - $ 603,060 Corporate obligations - 1,603,684-1,603,684 Government securities - 1,814,817-1,814,817 Mutual funds: Domestic 7,592, ,592,653 International - - 1,125,747 1,125,747 Equities: Small cap 803, ,661 Mid cap 1,816, ,816,401 Large cap 6,558, ,558,783 Real estate 243, ,729 Real estate investments 151,628-1,988,258 2,139,886 Cash 122, ,616 Total assets $ 17,892,531 $ 3,418,501 $ 3,114,005 $ 24,425, Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents restricted $ 742,540 $ - $ - $ 742,540 Equity securities 8,483, ,483,309 Government securities - 1,224,328-1,224,328 Corporate obligations - 1,364,145-1,364,145 Mutual funds 3,187,069 3,352,470 1,528,914 8,068,453 Real estate investments 181,016 1,770,347 1,951,363 Cash 248, ,603 Total assets $ 12,842,537 $ 5,940,943 $ 3,299,261 $ 22,082,741 During 2010, additional information became available regarding certain mutual fund investments and management determined that mutual funds previously classified as Level 2 should be classified as Level 1. The Foundation transferred $3,352,470 from Level 2 to Level 1 during

14 Changes related to the fair values based on Level 3 inputs for 2010 and 2009, are summarized as follows Beginning balance $ 3,299,261 $ 3,922,727 Total gains (losses) realized/unrealized 359,166 (452,352) Purchases/additions 518,139 1,089,531 Sales/payments (1,062,561) (1,017,538) Transfer out - (243,107) Ending balance $ 3,114,005 $ 3,299,261 Transfers out of Level 3 represent existing assets that were previously categorized as Level 3 for which the lowest significant input became observable during the period. Unrealized gains (losses) on Level 3 investments were $393,252 and ($7,204) for 2010 and 2009, respectively, and is recorded as investment income. 6. TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS Temporarily and permanently restricted net assets were available for the following Hospital purposes at December 31, 2010 and 2009: Temporarily restricted net assets: Bone and Joint Hospital $ 5,851,373 $ 5,576,024 Patient Care 2,514,662 2,288,124 Campus development 890, ,109 Education conference center 153, ,425 Raulston Lectureship Fund 86,743 81,672 Heritage pledges 501, ,477 Obstetrics/Gynecology 100, ,733 Oncology 82,276 78,450 Mental Health 505, ,184 Continuing Medical Education 139, ,089 Vogt Trust for Heritage Fund 259, ,647 Other 546, ,670 Total temporarily restricted net assets 11,631,692 11,132,604 Permanently restricted net assets: Nursing education 45,573 45,573 Charity care 30,000 30,000 Total permanently restricted net assets 75,573 75,573 Total temporarily and permanently restricted net assets $ 11,707,265 $ 11,208,

15 7. GIFT ANNUITIES Gift annuities consist of contributed amounts subject to obligations to make fixed periodic payments to beneficiaries over their lifetimes or a fixed term. The gift annuity liability is recorded at the actuarial present value of the aggregate liability for annuitants based on life expectancy tables. The discount rate in effect as of the date the annuities were established is used to determine the present value of the gift annuity liability. These discount rates are based on the December Applicable Federal Rate of each year. The adjustment to the liability is included in the accompanying statements of activities. Payments made to gift annuity beneficiaries for the years ended December 31, 2010 and 2009 were $78,341 and $78,341, respectively. 8. ENDOWMENTS The Foundation s endowments consist of two individual donor-restricted endowment funds established for nursing education and charity care. Donor-Restricted Endowment Net Asset Composition by Type of Fund Permanently restricted $ 75,573 $ 75,573 Total $ 75,573 $ 75,573 Changes in Endowment Net Assets for the Year Ended Temporarily Permanently December 31, 2010 Unrestricted Restricted Restricted Total Endowment net assets beginning of year $ - $ - $ 75,573 $ 75,573 Realized and unrealized gain - 6,079-6,079 Management fee - (377) - (377) Investment income - 2,526-2,526 Appropriated for expenditures - (8,228) - (8,228) Endowment net assets end of year $ - $ - $ 75,573 $ 75,573 Changes in Endowment Net Assets for the Year Ended Temporarily Permanently December 31, 2009 Unrestricted Restricted Restricted Total Endowment net assets beginning of year $ - $ - $ 75,573 $ 75,573 Realized and unrealized gain - 10,421-10,421 Management fee - (331) - (331) Investment income - 3,078-3,078 Appropriated for expenditures - (13,168) - (13,168) Endowment net assets end of year $ - $ - $ 75,573 $ 75,573 Funds With Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or state law based on the

16 Uniform Prudent Management of Institutional Funds Act of 2006 (SPMFIA) requires the Foundation to retain as a fund of perpetual duration. In accordance with generally accepted accounting principles, deficiencies of this nature are reported in unrestricted net assets. There were no such deficiencies as of December 31, 2010 and Return Objectives and Risk Parameters The Foundation has adopted investment and spending practices for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period(s) as well as to be invested in a manner that is intended to produce results that exceed the price and yield results of the allocation index while assuming a moderate level of investment risk. The Foundation expects its endowment funds to provide a rate of return that preserves the gift and generates earnings to achieve the endowment purpose. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and interest and dividend income. The Foundation uses a diversified asset allocation to achieve its long-term return objectives within prudent risk constraints to preserve capital. Spending Policy and How the Investment Objectives Relate to Spending Policy The Foundation has a practice of appropriating for distribution the current year earnings on the endowment fund, if the restrictions have been met. This is consistent with the organization s objective to maintain the purchasing power of the endowment assets held in perpetuity as well as to provide additional real growth through new gifts and investment return. 9. RELATED-PARTY TRANSACTIONS The following transactions occurred between the Foundation and SSMOK for the year ended December 31, 2010 and 2009: Contributions to the Hospital for: Operating purposes $ 968,826 $ 1,204,684 Capital purchases 655, ,375 $ 1,624,152 $ 1,336,059 The Hospital pays all the fundraising and management and general and expenses of the Foundation which are subsequently reimbursed by the Foundation. For the years ended December 31, 2010 and 2009, the Foundation reimbursed the Hospital $719,076 and $641,850, respectively, related to these expenses. The December 31, 2010 and 2009, balances of accounts payable and accrued expenses are due to the Hospital. In addition, the Foundation uses certain facilities of the Hospital at no charge. ******